METALS-Nickel firms as plant closure amplifies supply fears

Zandi Shabalala

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline from SINGAPORE)

LONDON, Oct 24 (Reuters) - Nickel touched a one-week high on Thursday after Papua New Guinea ordered the closure of a nickel processing plant over its failure to take remedial action after a slurry spill, intensifying supply concerns

The plant owned by Metallurgical Corp of China (MCC) produced nickel hydroxide containing 16,429 tonnes of nickel and 1,497 tonnes of cobalt in the first half of 2019, according to MCC.

Benchmark nickel was up 1.5% at $16,835 a tonne by 1050 GMT, its highest since Oct. 16.

"The shutdown at the plant comes at a time when people are potentially factoring in a supply shortfall in 2020 with the Indonesia ban coming into place," said Capital Economics analyst Kieran Clancy.

Indonesia, the world's top nickel ore supplier, said in September that it will stop ore exporta in 2020, pushing forward a ban by two years and lifting prices.

NICKEL: Inventories of nickel in LME-registered warehouses shed 3,894 tonnes, or about 5%, to 79,800 tonnes, the lowest level since January 2009. Total stocks have halved in the past month. <MNISTX-TOTAL>

The nickel cash to three-month spread remained in a contango after touching premium of more than $200 a tonne this month as traders anticipated metal returning to the exchange. <CMNI0-3>

Analysts at ING Bank said weakness in the nickel spread was because of "the weak physical market, driven largely by the stainless steel market", which accounts for most nickel demand.

FLOOR PRICE: Indonesia's mining ministry is revising a rule that governs the domestic price of nickel ore to ensure smelters follow government benchmark prices, a ministry official told Reuters.

NICKEL BALANCE: Global demand for nickel is expected to increase to 2.52 million tonnes in 2020, with output rising to 2.48 million tonnes, the International Nickel Study Group said.

COPPER: Normal operations resumed at top copper producer Codelco after workers struck a deal with the government after staging a one-day strike in solidarity with a nationwide protest in Chile.

MINE BAN: The Philippines mining regulator has recommended lifting a three-year suspension of the environmental permit for what could be one of the world's largest copper mines, the Tampakan project.

COPPER: Benchmark copper touched a one-month high and was up 0.2% at $5,892 a tonne.

The copper market faces a possible 320,000 tonne deficit this year reversing to a surplus of 281,000 tonnes in 2020, the International Copper Study Group said.

OTHER PRICES: LME aluminium eased 0.2% to $1,726 a tonne, zinc rose 1.1% to $2,495, lead added 0.1% to $2,227 and tin was up 0.7% at $16,670.

(Reporting by Zandi Shabalala Additional reporting by Mai Nguyen Editing by David Goodman )